Mr. LAMPERT. You do not object to that, do you?

Ι

Mr. PETTY. No, sir. Mr. Lampert, may I interrupt just a moment? Mr. LAMPERT. Yes.

Mr. PETTY. To say we have no objection to the Blaine bill at all. Mr. LAMPERT. To the entire bill?

Mr. PETTY. To the entire bill. I was merely bringing to the attention of the committee certain phases for their consideration, not in the form of objection at all.

Mr. MCLEOD. What is the meaning, Mr. Petty, of the words "simulated transactions"?

Mr. PETTY. I meant to look in the dictionary, Mr. McLeod. I would assume it means "fake sale "; that is as near as I could get at it without looking in the dictionary.

Mr. MCLEOD. Is it a real-estate term, "simulated transaction"? Mr. PETTY. No; to tell you the truth I never heard of it until it was introduced in a bill by Mr. Blanton.

Mr. MCLEOD. Was it defined at that time?

Mr. PETTY. I do not recall.

Mr. MCLEOD. It is not an expression used in the real-estate 'business?

Mr. PETTY. It is not an expression used in our business; no, sir. I think that I can say I never heard the word until Mr. Blanton brought it up.

Mr. MCLEOD. Do you understand that expression, Mr. Patman? Mr. PATMAN. How is that?

Mr. MCLEOD. "Simulation transaction."

Mr. PATMAN. I do not think "simulate "

not think you will find that.

means to face.

I do

Mr. PETTY. Do you know the definition of "simulate "?

Mr. PATMAN. No; I do not.

Mr. PETTY. I meant to look it up in the dictionary.

Mr. PATMAN. I do not think it means fraud.

Mr. PETTY. You do not?

Mr. PATMAN. No, sir.

Mr. MCLEOD. The thing I had in mind was that the phrase should 'be defined in this act; do you not think so? If you wanted to base a prosecution of "simulated transaction" it would have to be determined what is the simulated transaction.

Mr. PETTY. Of course, if they ever got into court, the courts would have to interpret it. I should think the expression, "That is not a bona fide sale" is strong enough to cover it without the word "simulate." "Simulate" must be the opposite to bona fide.

Mr. MCLEOD. I should think so.

Mr. PETTY. Do not misunderstand me, Mr. Chairman; we are not objecting to the word "simulate " or the whole paragraph. We want to correct the evils. It should be defined in the statute, I think, if we are going to base a transaction on what is a "simulated transaction."

Mr. MCLEOD. You see, when it is put up to the committee, four of us do not know how that is interpreted.

Mr. PETTY. You understand, Mr. McLeod, that this paragraph as it is written has absolutely no relation to the real-estate commission.

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as such; it does not say that the real-estate commission shall do or not do anything in the circumstance, but merely enunciates a new, definite, specific law, which has no relation to the real-estate commission.

Mr. PATMAN. Do you favor it as an independent bill?
Mr. PETTY. I do not think we would oppose it.

Just the

Mr. PATMAN. What is the objection to having it here? bare statement that it is not related, I do not think would be sufficient to condemn it.

Mr. PETTY. I am not a lawyer.

Mr. PATMAN. It would not hurt the bill; it would not hurt its constitutionality. It would not interfere with it in the least?

Mr. PETTY. Except this, that the real-estate profession throughout the country has for a number of years been definitely endeavoring to establish better practices in real estate.

Mr. MCLEOD. It comes in the definition of the bill itself, which is to protect the public against fraud in real-estate transactions; therefore, it is germane, is it not?

Mr. PATMAN. Sure. I now have the definition here in Webster, which says "feigned; pretended; to assume the mere appearance of falsely; to counterfeit; feign; imitate." It may or may not indicate fraud. Of course, counterfeit certainly would come within fraud. Mr. MCLEOD. It is directed at the sharp trading.

Mr. PATMAN. Anything pretended.

Mr. PETTY. It means a "big deal."

Mr.. PATMAN. But this bill goes further than that. It says not only must the sale be simulated, but must be done for the purpose of misleading. So the bill is very plain.

Mr. PETTY. For that reason I say that we can not possibly object to that being in it, because a sane man could not object to a law that would prevent or prosecute a man who deliberately defrauded others; and that is not our intention.

Mr. PATMAN. Just another suggestion: You would have no objection to putting a clause in here specifically providing that it shall be unlawful for a mortgage loan or trust company to simulate a transaction which would indicate that they have a certain amount that has been loaned on this property, representing the first trust, when in truth and in fact they have not loaned that amount, but have merely represented by reason of a guarantee of a person who was in the trust company or outside of it, who was financially able to back up that guarantee. You would not have any objection to a clause like that?

Mr. PETTY. All of that kind of legislation more properly belongs under blue-sky legislation.

Mr. PATMAN. This law protects the public and that would be protection for them?

Mr. PETTY. It would be protection, and that sort of a provision you stated, I think, is contemplated in the Blaine blue-sky law.

Mr. PATMAN. You would not object to a separate law covering that?

Mr. PETTY. Put it into the so-called financing, that is not realestate brokerage as defined in the terms of this license law; and I am not a financier.

Mr. PATMAN. You certainly do not believe in anything like that? Mr. PETTY. I do not believe in any fraud.

Mr. PATMAN. Well, is that being done in Washington?

Mr. PETTY. I do not know of my own knowledge of any bill.
Mr. PATMAN. Is it your opinion it has been done here?

Mr. PETTY. Certainly; it has been done in every city in the country.

Mr. MCLEOD. Mr. Petty, let me ask your attention to the definition and the title of this bill [reading]:

To define, regulate, and license real-estate brokers and real-estate salesmen; to create a real-estate commission in the District of Columbia; to protect the public against fraud in real-estate transactions, and for other purposes.

If we are going to maintain that title this certainly has a clear place in the bill?

Mr. PETTY. That latter clause is not used in the other laws.
Mr. MCLEOD. That may be.

Mr. PETTY. This is probably a little broader bill.

Mr. MCLEOD. You say this bill is satisfactory to you in every respect?

Mr. PETTY. You understand, and I think the committee understands, I would get in touch with Mr. Brinkman and work up the amendments which I believe the committee will very cheerfully agree to.

Mr. MCLEOD. Have you anything further to say at this time? Mr. PETTY. No; except that we hope Congress will pass this type of legislation. There is need for it in Washington.

Mr. PATMAN. Will you get for me a copy of the real-estate law? It can not be found in that code.

Mr. PETTY. I will be glad to.

Mr. PATMAN. And leave it with Miss Patterson.

Mr. MCLEOD. The committee will now stand adjourned until next Monday morning at 10.30 o'clock for further consideration of this bill.

(Thereupon, at 11.50 o'clock a. m., the subcommittee adjourned to meet Monday, March 10, 1930, at 10.30 o'clock a. m.)

REAL ESTATE, MORTGAGE FORECLOSURE, AND BLUE

SKY LEGISLATION

MONDAY, MARCH 10, 1930

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON JUDICIARY

OF THE COMMITTEE ON THE DISTRICT OF COLUMBIA,

Washington, D. C. The committee convened at 10.30; Hon. Clarence J. McLeod, presiding.

Mr. MCLEOD. We will take up the bill H. R. 10476, a bill to define, regulate and license real-estate brokers and real-estate salesmen; to create a real-estate commission in the District of Columbia; to protect the public against fraud in real-estate transactions, and for other purposes.

Mr. Brinkman and Mr. Petty of the Real Estate Board, are here, and it was suggested at the last meeting that possibly Mr. Brinkman would iron out some of the difficulties that the Real Estate Board did not quite agree with.

I think you pointed out, Mr. Brinkman, that there were about 23 changes to be made in the bill as originally introduced before the committee, but some of them were not of much importance, I think. Since that time Mr. Petty has advised me that he has talked with you and that there is very little difference now between you.

Mr. BRINKMAN. Mr. Petty and I have gone over the changes that he suggested, and we have agreed on everything, I might say, that needs to be done to perfect the bill as far as we can see. The changes that are now suggested are of a minor character for the most part; some typographical errors were made at the Printing Office, and those have been corrected.

If you wish, Mr. Chairman, I will state the changes agreed upon between Mr. Petty and myself.

Mr. MCLEOD. Which will you read from?

Mr. BRINKMAN. Your bill, H. R. 10476.

The first change is page 1, line 4, strike out the word "sixty" and insert the word "ninety," so that that part will read: "That on and after 90 days from the date of approval of this act," and so forth. This is so that the commission will begin to issue licenses 90 days after the enactment of the act, instead of 60. It gives them the necessary time to prepare and to take the needed steps. They will be appointed probably one month after the act passes, and they will need two months in which to prepare to function.

The next is page 1, line 5, after the word "unlawful" insert the words "in the District of Columbia " so that there can be no ques